Why does inequality matter and what can the government do about it?
The UK is one of the most economically unequal countries in the developed world.
The international evidence shows that inequality harms physical and mental health, self-esteem, happiness, sense of trust and civic participation. Unequal societies have less social mobility and tend to have higher crime rates.
The most recent data has shown a slight fall in income inequality as a result of extremely low levels of income growth since the beginning of the financial crisis in 2007/08. However, this trend is likely to be reversed when scheduled social security cuts take effect, leading the IFS to predict a 50% rise in child poverty by 2020. Meanwhile, falling or stagnant incomes and growing house prices in the last decade are increasing wealth inequality.
Inequality is harming the economy
“If you grow the pie but too few people enjoy the benefits of it, the fruit, you’ll have an unstable society.”
Lloyd Blankfein, Chief Exec of Goldman Sachs, June 2014
“High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.”
Bill Gates, October 2014
“We meet today during the first lost decade since the 1860s. […] When combined with low growth of incomes and entrenched intergenerational inequity, it is no wonder that many question their prospects.”
Mark Carney, Governor of the Bank of England, December 2016
“Growing income and wealth disparity is seen by respondents as the trend most likely to determine global developments over the next 10 years.”
World Economic Forum Global Risks Report, January 2017
“One of the leading economic stories of our time is rising income inequality, and the dark shadow it casts across the global economy.”
Christine Lagarde, IMF Managing Director, May 2014
Inequality undermines human rights, individual agency and freedom
Inequality, particularly when it grows, suggests that the right policies are not in place to ensure an adequate standard of living and the improvement of the enjoyment of human rights for all.
Equality, however, is not only about resources and needs. It is also about freedom. Equality is of paramount importance for meaningful choice in a free society.
More equality means more autonomy and more agency. A more equal society can empower more people to take control over their lives.
But...inequality is not inevitable.
The Government has a powerful tool at its disposal
The Equality Act 2010 consolidated anti-discrimination legislation to require equal treatment in private and public services, and access to employment, for the protected characteristics of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.
So what about economic inequalities? Section 1 of the Equality Act introduced a socio-economic duty on public bodies that required them:
‘when making decisions of a strategic nature about how to exercise its functions’ to ‘have due regard to the desirability of exercising them in a way that is designed to reduce the inequalities of outcome which result from socio-economic disadvantage.’
Compelling public bodies to consider how their decisions and actions could exacerbate or reduce inequality would help to shield the most vulnerable and level the playing field between people from different socio-economic backgrounds.
However, despite being passed by Parliament in 2010, the Governments since then have refused to bring section 1 into force.
Following later amendments, if commenced now, the socio-economic duty would apply to ministers; Government departments; county, district and borough councils in England (and the Isles of Scilly); the Greater London Authority and police and crime commissioners.
The Scottish Government has already announced that it will legislate this year to introduce the socioeconomic duty. The Wales Act 2017 confers this power on the Welsh Government.
Are you #1forEquality? Act now...
We call on the UK Government to commence section 1. Fully in force, the Equality Act would require transparent assessments of how public bodies’ policies and decisions contribute to our unequal outcomes – and how they could help to close the gap.